BitcoinWorld

Black_background_logo_BitcoinWorld-removebg-preview
Learn

Know This Different Types Of Cryptocurrencies

The most well-known cryptocurrency and largest in terms of market capitalization is bitcoin. But to lower overall risk, a well-balanced portfolio will contain a variety of different coins. Let’s examine a few of them.

Payment Coins 

It’s difficult to find new coins these days that focus solely on payments. However, when cryptocurrencies first emerged, the majority of projects were mechanisms for value transfer. The most well-known example is Bitcoin, but there are many other cryptocurrencies including Litecoin (LTC), Ripple (XRP), and Bitcoin Cash (BCH). Prior to Ethereum and the invention of smart contracts, these coins were the initial generation of cryptocurrencies.

Stablecoins

A stablecoin makes an effort to follow an underlying asset, like fiat money or precious metal. For instance, BUSD pegs the US dollar with reserves that are set at a 1:1 ratio. The similar approach is used by PAX Gold (PAXG), except the coin is linked to the cost of one fine troy ounce of gold that is kept in reserves. Stablecoins live up to their name and provide stability, even though they may not always yield high returns.

Since the crypto market is unstable, it helps to have investments in your portfolio that maintain their worth.

Security Tokens 

A security token can stand in for a variety of items, just like conventional securities. It could be ownership in a business, a bond issued for a particular undertaking, or even voting rights. Securities now essentially fall under the same laws as other financial instruments because they have been digitalized and placed on the blockchain. Because of this, security tokens are under the purview of regional regulators and must go through a legal procedure before being issued.

Utility tokens

The key to a service or item is a utility token. For instance, utility tokens like BNB and ETH both have them. You can use them, among other things, to pay transaction costs when working with decentralized applications (DApps). In order to raise money through a coin offering, several projects create their own utility tokens.

The value of the utility should, in theory, be directly proportional to the value of the token.

Governance Tokens

You can gain voting rights and even a cut of the profits by owning a governance token. These tokens are most likely to be found on platforms for decentralized finance (DeFi), such as PancakeSwap, Uniswap, or SushiSwap. A governance token’s value is closely correlated with the success of the underlying project, much like utility tokens are.

Avatar photo
My Name is Will. I'm a News/Content Writer and SEO Expert. I have good way of using good English construction to write credible articles ranging from News Articles to Creative Writing all around Cryptocurrency Industry. I have actively worked and still working with Crypto startups and have maintained credibility in the Cryptocurrency space.

Crypto products and NFTs are unregulated and can be highly risky. There may be no regulatory recourse for any loss from such transactions. Crypto is not a legal tender and is subject to market risks. Readers are advised to seek expert advice and read offer document(s) along with related important literature on the subject carefully before making any kind of investment whatsoever. Crypto market predictions are speculative and any investment made shall be at the sole cost and risk of the readers.